EIA Inventory Preview: Further Crude Draws Expected

EIA Oil Inventory Preview: The EIA weekly petroleum status report will be released at 10:30 EDT (15:30 BST) today

• Crude inventories are expected to draw by -2.33mbbls for the week to 3rd June according to a survey. US stocks are 4.5% below the bottom of the 5-year range after a surprise draw last week. The US has been a net exporter of oil for 12 weeks running, with crude exports near the highest in 5 years. The continuing SPR release is keeping crude imports low, especially on the West Coast.
• Refineries on the East Coast were operating at 98.2% capacity last week and the highest since 2018. Total US utilisation was high at 92.6% helped by the restart of two West Coast refineries after maintenance. The end to maintenance at the Baton Rouge refinery may help keep high refinery run rates. Refiners are producing the highest amount of gasoline this year helping to meet strong domestic and export demand. Gasoline exports are well above 5- year range and highest since 2018 driven by exports to Mexico and Latin America.
• Despite higher refining rates, East Coast fuel supply remains tight, and the regional inventories are still falling. Product exports are proving to be more profitable than feeding the domestic market despite record US pump prices. Maintenance at the Irving St John refinery in Canada since mid-May is adding to tight East Coast supply. Gasoline is expected to build by +1.0mbbls and distillates by +0.75mbbls.
• The API data released last night showed a build in crude of +1.845mbbls and builds in both gasoline and distillates of +1.821mbbl and +3.376mbbl respectively. The expectation of builds has pushed product crack spreads lower but with supply so tight any changes in the EIA data could send prices higher again.
• The WTI-Brent spread has been stable over the last week or so at around -3.35$/bbl helping to maintain high US crude exports. API data last night showed a draw of -1.8mbbls at Cushing pushing stocks even further below normal. If the EIA confirms the draw this could help to push WTI higher and close the spread.